Earlier this week, ministers from the world's top economies, the G7, called for greater speed as financial watchdogs introduce comprehensive crypto regulation. This comes shortly after Terra's demise saw several crypto users suffer considerable losses in the space of a week. G7 Contacts FSB to Hurry Things Up The stablecoin failed to maintain its dollar peg and crashed as low as $0.07, with sister token LUNA not far behind. This created a ripple effect as general market anxiety destabilized even…
In simple terms, capitalism is an economy where private entities have the financial power to utilize available resources as they wish. Every investor practices some form of capitalism. Therefore, investors take advantage of capitalism’s most significant benefit, which is the ability to create wealth. Capitalism has been beneficial in society as countries grow economically, and living standards are improved.
Strong free enterprises get a significant boost since prices of goods and production levels are based not on a regulating body or government but open market competition. Therefore capitalism narrowly focuses on reducing the government’s involvement and increasing shareholder value. Even though capitalism has improved life’s quality levels through the years, there are still problems that we cannot overlook. This article will explain the demerits of capitalism in society and how blockchain and cryptocurrencies can help.
Capitalism’s Trust Issues
Centralized systems can cause distrustful relations towards capitalism. However, centralized systems also have disadvantages. For example, banks have complete control over transactions posted on bank ledgers and bank statements. Full control means that they can penalize individuals and transact money from their accounts at any given time. In case of any malicious intent by the centralized institute, the consequences can be many. They can even close down the person’s business without notifying them hence prohibiting further transactions.
This narrative points out that leniency towards the complete decentralization of trust authorities would be an important step. However, with blockchain’s peer-to-peer technology, virtual currency is transferable worldwide without the need for intermediaries or central authorities. In decentralized peer-to-peer systems, computers are used to carry out different commands. Each maintains a copy of the ledgers and compares it to the other devices to ensure data accuracy.
Due to the peer-to-peer networking capabilities, it is impossible to take down the blockchain. Furthermore, the network offers better security, unlike traditional client-server systems. Third parties do not need to be trusted with important information, as decentralized systems would lower the risk of crucial data modification instances that central authorities are typically not resistant to. Lastly, blockchain gives a relatively higher degree of resistance to all forms of malicious activity.
Reduce Inequality Cycle
Blockchain’s ultimate feature is that it does not allow centralization of power. Blockchain technology will lose its selling point once a single unit gains control over it. This quality is beneficial because when humans are in a power position, they benefit from inequality. However, blockchain solves this problem by removing power from the equation and any central points of failure.
In a blockchain, no one has more authority on the network than another individual. Each individual’s transactions are visible to everyone, but their identities are under encryption. With Bitcoin, for example, nobody manages their accounts; therefore, stealing from them is impossible, and so is manipulating their network.
The downside to this is that nobody can restore your password if lost. Thanks to the blockchain network, we can imagine a world powered by P2P blockchain organizations, giving every individual worldwide equal opportunity to create wealth. Humanity is, therefore, willing to explore the possibilities of a decentralized world soon.
Compliance to Environmental Standards
Traditional power grids being centralized cause inefficient energy distribution. In some parts of the world, whereby there is poverty or the effects of natural disasters, power outages are most likely to leave the people without electricity.
However, the blockchain has a solution for environmental issues as P2P blockchain-based energy systems reduce electricity transmission over a long distance. A blockchain-based P2P platform such as SunContract is a power plant installation. Such plants are expensive and mostly financed by governments of reputable private companies.
With this platform, people are empowered to invest directly in renewable energy installations in their areas. Another blockchain platform under development is EcoChain, which will give similar opportunities to the SunContract. The environmental impacts of products are difficult to determine as the carbon footprint is not factored on its price.
Tracking carbon footprints of different products using the blockchain would be essential to determine charges of a carbon tax at the selling point. In turn, people will be encouraged to buy environmentally friendly products, enabling companies to reconstruct supply chains to meet the products’ demands. Cryptocurrency must go green in that companies invest in using renewable energy sources to minimize environmental destruction rampant rates.
Digitized Solution for Democracy
In this age, voting should not be done by placing marks on paper sheets because we have all the right technologies at our disposal. Votes can be kept secure, anonymous, and tamper-proof. With a well-meaning government, society should be given an incentive to vote with no middleman interference. Using a centralized system results in a complete lack of transparency and security in the voting field. Blockchain technology solves this societal setback by reducing threats from cyberattacks compromising election results.
Costs related to electronic voting machines and ballot printing decreases significantly. Also, there is guaranteed greater participation in voting exercises even remotely. Governments and private sectors need to work hand-in-hand to educate society about the blockchain. The blockchain is already known as an immutable, decentralized, and transparent digital ledger that stores records.
According to the article’s quick look at some real-world problems, it is evident that blockchain can solve some critical societal issues. These are real-life issues brought about by capitalism that connect with real people. However, businesses, governments, private firms, and society are not yet convinced that they need blockchain.
This could be partly because of its associated costs and its high maturity levels as a technology. On the bright side, some companies and firms are beginning to adopt the technology, which is an act that will pave the way for a brighter future.